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ETWO vs. INFA: Which Stock Is the Better Value Option?

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Investors interested in Internet - Software stocks are likely familiar with E2open Parent Holdings, Inc. (ETWO - Free Report) and Informatica Inc. (INFA - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, E2open Parent Holdings, Inc. has a Zacks Rank of #2 (Buy), while Informatica Inc. has a Zacks Rank of #3 (Hold). This means that ETWO's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

ETWO currently has a forward P/E ratio of 21.45, while INFA has a forward P/E of 21.51. We also note that ETWO has a PEG ratio of 1.42. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. INFA currently has a PEG ratio of 2.18.

Another notable valuation metric for ETWO is its P/B ratio of 0.92. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, INFA has a P/B of 3.18.

Based on these metrics and many more, ETWO holds a Value grade of B, while INFA has a Value grade of D.

ETWO is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that ETWO is likely the superior value option right now.


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